ESTATE PLANNING WHEN YOU HAVE A CABIN OR VACATION HOME
Some of us are privileged to have extra things in our life, like a cabin or a nice house to leave to the next generation. Sometimes even a winter retreat or a summer retreat.
The problem with that in estate planning is this: If you have family members that you want to leave that cabin to the next generation, what are they going to do with it? Sometimes it’s very easy, everybody loves to use it, they’ll share the expense of maintaining it, they’ll equally take care of it and everything will work out fine.
Well, in the real world, that doesn’t always happen. So you have to plan for the contingency that maybe one of those families does not want to have a share in that cabin. Maybe one of those families would rather have it sold and get their money for their share out of that cabin. Maybe there’s people who would love to use the cabin and do use the cabin but they don’t take good care of it. So it’s a mess when they leave, maybe they don’t pay their share of the maintenance fees. All kinds of things can happen.
So, when we see a cabin or extra property in an estate plan, it does raise a bit of a red flag. I’ll have to have a pretty frank conversation with you to make the determination of how to handle that. And sometimes it’s pretty rough, but you get to call the shots. And if you, in making your estate, decide that you don’t want the next generation to have problems, then you just tell them, this is exactly what I want you to do.
Maybe you sell it. Maybe you put it in a separate trust or keep it in this trust, and people can just use it. Maybe you even say that there’s a daily rate. There’s all kinds of things you can do to preserve that asset in your family. Or, you could just say, look, I know you guys don’t even want it or you don’t want to mess with it, so let’s just sell it. The trustee will use discretion, just like the trustee can use discretion in selling other things. Maybe they wait until the market comes back or its stronger.
But the trustee is somebody you trust to make those decisions on a reasonable, rational, business basis. And therefore the best things happen for all members of the family. But you get to decide that. Very rarely do you just say, do whatever you want, trustee. But you can do that too. You can let the kids haggle it out and that’s fine. That is the joy, I guess, the challenge, the responsibility of setting up an estate.
And that’s why it is important to think about at the time you do your estate plan. We help you sort all those things out. I try to be an objective voice, a person to bounce ideas and options off of, and we will help you work that out.